Banks Are Capable Of Meeting Recapitalization Deadline — ACAMB

By Clement Alphonsus
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The Association of Corporate & Marketing Communication Professionals of Banks has strongly expressed that Nigerian banks are well able to meet the new recapitalisation requirements of the Central Bank of Nigeria.

In a statement issued on Monday, the association disclosed that while banking was safe and sound, there are always room for improvement.

In its latest circular to banks in the country on Thursday, the CBN ordered commercial banks with international authorisation to raise their capital base to N500bn and national banks to N200bn while those with regional authorisation are expected to achieve a N50bn capital floor.

Also, non-interest banks with national and regional authorisations will need to raise their capital to N20bn and N10bn, respectively.

According to ACAMB in a statement signed by its president, Rasheed Bolarinwa, “As Nigeria seeks to aggressively unlock its innate potential to become a global emerging economy, banks must also stand ready to play their crucial role of financial intermediation.

“The CBN circular on review of minimum capital requirement for commercial, merchant and non-interest banks over the next 24 months has laid to rest any anxiety about the intention, process and possible outcome of the new recapitalisation exercise. The import of the recapitalisation announced is that Nigerian banks are safe and reliable but the apex bank in its developmental mandate, is leading the banks to strengthen their capacities to meet competitive domestic and global financial needs.”

Also, the association applauded the CBN for the thoughtfulness it had put into the announced modality for the recapitalisation.

Bolarinwa said, “ACAMB particularly notes the distinctive definition of the new minimum capital base for each category of banks as the addition of share capital and share premium, as against the previous use of shareholders’ funds.

“We urge the public to take note of this change. As it stands, banks are on the same page and as such, there is no need whatsoever for any fear, as the banks have the capacity to meet the recapitalisation in line with allowable options stipulated by the apex bank. All facts point to a win-win for the Nigerian banks, the financial market and the economy under this recapitalisation."

While explaining the role of the capital market in the new recapitalisation process, the ACAMB boss said, “The Nigerian capital market, where banks are the most influential group, has the depth to meet the capital requirements of banks. The extended timeline until 2026 provides ample opportunity for each bank to follow through on its recapitalisation plan without undue crowding effect.”

To effectively meet the new capital requirement, the CBN provided the sector with three options, including the issuance of new common shares (by way of public offer, rights issues, or private placements); mergers and acquisitions and upgrade/downgrade of their respective license category or authorisation.

Bolarinwa maintained that, “This recapitalisation will put Nigerian banks in better stead to support the strengthening of the economy; the expansion of the real sector, and the building of bigger banking brands that can compete continentally and globally. Banks will continue to cooperate with the CBN in the implementation of the recapitalisation programme."